Letter: Ag2School tax credit’s impact on Southland School District
As a Southland School Board member who was raised on a farm and continues to farm today, I fully understand the impact of the price tag associated with the upcoming Southland Bond Referendum. The 40 percent Ag2School tax credit, which started Jan. 1, 2018, provides a 40 percent reduction in an Ag landowner’s contribution to a school bond in their local district. This tax credit offsets the prices for farmers who help keep rural Minnesota strong.
Some of you may be asking, “Can the Ag2School tax credit be overturned during Southland’s 20-year bond?” In order to answer this question, I went directly to Senator Dan Sparks. In my conversations with Sparks, he was reassuring that the Ag2School tax credit bill does not have a sunset date. Meaning there is no renewal date or expiration date that would directly impact our 20-year bond if the referendum passes.
The Ag2School bill was passed through bipartisan support, meaning both parties were in favor of passing this bill. While it is always possible for a bill to be reduced or thrown out, it is highly unlikely with this bill due to the bipartisan support. In fact, just last year a group of senators tried to amend the bill to increase the percentage paid, not decrease the amount this tax bill would cover.
Now, what does this mean for Southland School District as a whole? Based on qualifying Ag land within Southland’s School District, just over 30 percent of the bond (including both principal and interest) will be paid for by the state via the Ag2School tax credit if the Bond Referendum passes on Nov. 6. If the Bond Referendum fails, the state will contribute zero dollars to the District.
A passing Bond Referendum of both Question 1 and 2 on Nov. 6 would approve an $18.2 million renovation to create a like new K-12 school for our students. This will also trigger the Ag2School tax credit, providing state funding immediately in 2019, equating to around $5.5 million in state funding directly from the Ag2School tax credit according to figures provided by Ehlers, the District’s financial advisor. A contribution like this to our school district would result in renovating the school to a like-new condition for $12.7 million, keeping $5.5 million within the Southland School District.
If you have any questions, please feel free to join me and the Southland School Board on Nov. 1 for an open house at the Middle/High School to discuss the Bond Referendum.
Southland School Board Treasurer